KBC Equity Fund Enhanced Intelligence Stock Selection

Sub-fund of an open-ended investment company under Belgian law (bevek), managed by the Belgian management company KBC Asset Management NV. This is a marketing communication.

An equity fund that invests worldwide 

Shares offer interesting long-term prospects for return. However, their value may fluctuate. By opting for a globally diversified equity portfolio, your investment is more resilient to shocks.

Equity selection using advanced quantitative models 

Effective equity selection plays a major role in success on the stock market. Economic research shows that shares with certain financial characteristics (factors) perform better on average than shares without those characteristics. Examples include:

  • Strong price performance over the past period (momentum)
  • Low price-to-book ratio (value)
  • Strong growth forecast (growth) 
  • Healthy financial balance sheet (quality)
  • Positive earnings revisions
  • High dividend yield 
  • High research and development expenditure

The quantitative models rate shares on these factors to determine which should be selected (factor investing). Shares are assigned a relative rating which gives them a heavier or lighter weighting in the fund than in the benchmark index. Integrated AI software allows the quantitative models to analyse a greater number of shares more thoroughly, thereby estimating their potential relative to each other. 

The AI software determines the potential of shares by selecting the factors currently considered most relevant for good stock market performance in the short and long term. The software integrates self-learning into this approach, adjusting itself each time new data is added by the fund manager.

Michal Majchrzak, Fund Manager, KBC Asset Management

Michal Majchrzak, fondsbeheerder, KBC Asset Management

What can you expect from this product? 

  • Actively managed equity fund
  • In euros
  • No maturity date, no capital protection, no guaranteed return
  • Redeemable on a daily basis

Risks

The risk indicator is 4 on a scale of 1 (lower risk) to 7 (higher risk). The summary risk indicator is a guide to the level of risk of this product compared to other products. It shows how likely it is that the product will lose money because of movements in the markets or because we are not able to pay you. 4 is typical for an equity fund and indicates that the fund is highly sensitive to the markets. Indeed shares do not provide a guaranteed return and their value can fluctuate sharply. This product does not include any protection from future market performance so you could lose some or all of your investment. The risk indicator assumes you keep the product for 8 years. The actual risk can vary significantly if you cash in at an early stage and you may get back less.

Moreover, an investment in this fund involves:

  • high level of exchange rate risk: since there are investments in securities that are denominated in currencies other than the Euro, there is a considerable chance that the value of an investment will be affected by movements in exchange rates.

Charges 

  • Entry charge: 3%
  • Exit charge: None, except 5% if you exit within a month of entry
  • Ongoing charges: 1.81% factored into the net asset value.
  • Anti dilution levy: In exceptional situations*


*When net subscriptions and redemptions involve exceptionally large amounts, KBC Asset Management may decide to apply an additional charge to the investors concerned [those entering or exiting the fund on that day] to mitigate the negative impact on the net asset value. The size of this levy is based on the transaction charges incurred by the manager. Applied in very exceptional situations, this levy is in the interests of those investors remaining in the fund. See section 'G. Fees and charges regarding the Bevek' in the prospectus.

Taxes

  • Withholding tax upon dividends: 30% tax upon dividends for Distribution Shares.​
  • Withholding tax upon exit: No.
  • Stock market tax upon exit: 1,32% (max. 4.000 euro). Only for capitalisation shares

Applies to individual investors who are subject to Belgian personal income tax.

Investment policy

KBC Equity Fund Enhanced Intelligence Stock Selection invests directly or indirectly in shares and/or share-related investments that may come from any region, sector or theme. The fund’s stock selection is based on quantitative criteria using publicly available information. These criteria are incorporated into a specific model designed by KBC Asset Management that applies advanced quantitative, to analyze a long and broad history of stock-level data. The basic assumption of this model is that share prices are not always an accurate reflection of the fundamental value of the company in question, but that this fundamental value can be estimated provided one has sufficient information and can process this information efficiently. It is also assumed that share prices will evolve towards fundamental value over time. However, the way in which this happens depends on the prevailing cycle in the market structure and its impact on the criteria included in the model. The quantitative model created by KBC Asset Management estimates a relative rating per share on a regular basis, evaluating shares in the investment universe relative to each other. Better-rated shares are assigned a relatively heavier weight in the fund's portfolio relative to their weight in the fund's benchmark, while lower-rated shares are assigned a relatively lighter weight relative to their weight in the benchmark. Appropriate diversification is ensured in accordance with relevant legal and risk restrictions. However, the fund manager may decide at any time not to follow the models or to follow them only partially. Human intervention is expected to occur rather in exceptional circumstances.   

KBC Equity Fund Enhanced Intelligence Stock Selection is actively managed with reference to the following benchmark: MSCI All Countries World - Net Return Index (www.MSCI.com). .

However, is not the aim of the fund to replicate the benchmark. The composition of the benchmark is taken into account when compiling the portfolio.

When compiling the portfolio, the manager may also decide to invest in instruments that are not included in the benchmark, or indeed not to invest in instruments that are included .

The composition of the portfolio will to a large extent be similar to that of the benchmark.

The benchmark is also used to assess the performance of the fund.

The benchmark is also used to determine the fund's risk limitation mechanism. This limits the extent to which the fund's return may deviate from the benchmark.

The longterm expected tracking error for this fund is 3.00 %. The tracking error measures the volatility of the fund's return relative to that of the benchmark. The higher the tracking error, the more the fund's return fluctuates relative to the benchmark. Market conditions may cause the actual tracking error to differ from the expected tracking error.

KBC Equity Fund Enhanced Intelligence Stock Selection may make limited use of derivatives*. This means that derivatives can be used either to help achieve the investment objectives (for instance, to increase or decrease the exposure to one or more market segments in line with the investment strategy), or to neutralise the portfolio’s sensitivity to market factors (by hedging an exchange rate risk, for example).  

The fund is denominated in Euro.

The fund reinvests any income received in the manner set out in the prospectus (for more details, see section 'Types of units and fees and charges' of the information for this sub-fund in the prospectus).

The above objectives and investment policy have been taken in their entirety from the Key Information Document (KID). Neither the capital nor the return is guaranteed or protected.

More things you need to know

This information is governed by the laws of Belgium. Please read the Key Information Document and the prospectus before subscribing. Both documents are available free of charge in Dutch and English (and in French for the key information document) from your KBC or CBC branch or at www.kbc.be/investment-legal-documents or www.cbc.be/documentation-investissements. You will also find a summary of your rights as an investor there in Dutch, English, French and German.

The net asset value can be found on www.beama.be, in KBC Mobile or CBC Mobile.

If you have a complaint, the contact details for KBC are complaints@kbc.be, tel. 016 43 25 94 or ombudsman@ombudsfin.be and the contact details for CBC are gestiondesplaintes@cbc.be, + 32 81 803 163 or ombudsman@ombudsfin.be for CBC.

* For the complete overview of financial and economic terms, go to www.kbc.be/lexicon of www.cbc.be/lexique.

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